SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
|X| Filed by the registrant
|_| Filed by a party other than the registrant
|_| Preliminary proxy statement
|X| Definitive proxy statement
|_| Definitive additional materials
|_| Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
-----------------------------------------------------------------------
Nations Fund, Inc.
-----------------------------------------------------------------------
Payment of filing fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- ------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- ------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
==============================================================================
(4) Proposed maximum aggregate value of transaction:
- ------------------------------------------------------------------------------
(5) Total fee paid:
- ------------------------------------------------------------------------------
<PAGE>
|_| Fee paid previously with preliminary materials
- ------------------------------------------------------------------------------
|_| Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
- ------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- ------------------------------------------------------------------------------
(3) Filing party:
- ------------------------------------------------------------------------------
(4) Date filed:
- ------------------------------------------------------------------------------
<PAGE>
NATIONS FUND, INC.
ONE NATIONSBANK PLAZA
CHARLOTTE, NORTH CAROLINA 28255
TOLL-FREE TELEPHONE: (888) 865-9548
August 31, 1997
Dear Shareholder of Nations International Growth Fund:
We are pleased to invite you to a special meeting of the shareholders
of Nations International Growth Fund (the "Fund") on October 10, 1997 (the
"Special Meeting"). The Special Meeting is being called to consider: the
approval of an amendment adding the Fund to an existing investment sub-advisory
agreement with Gartmore Global Partners ("Gartmore") and the approval of changes
to certain of the fundamental policies of the Fund.
o AN AMENDMENT ADDING THE FUND TO AN EXISTING INVESTMENT
SUB-ADVISORY AGREEMENT WITH GARTMORE
Prior to the reorganization of the Pilot International Equity Fund into
the Fund, Kleinwort Benson Investment Management Americas, Inc.
("Kleinwort") served as investment sub-adviser to the Pilot
International Equity Fund. Kleinwort continued to sub-advise the Fund
after the reorganization. Shortly after the reorganization, however,
several key investment management personnel of Kleinwort decided to
separate from Kleinwort, thereby leaving management of Nations Fund,
Inc. and NationsBanc Advisors, Inc. ("NBAI") unsure as to the quality
and nature of the investment sub-advisory services that the Fund would
receive in the future from Kleinwort. For this and other reasons
described in the accompanying Proxy Statement, effective as of the
close of business on July 11, 1997, the Board of Directors of Nations
Fund, Inc. terminated the investment sub-advisory agreement with
Kleinwort and approved Gartmore as the Fund's new investment
sub-adviser for an interim period of 120 days.
The Board of Directors of Nations Fund, Inc. also voted to recommend
that shareholders vote to continue Gartmore's role as investment
sub-adviser beyond the 120-day interim period. Because there are
already investment sub-advisory agreements with Gartmore on behalf of
the four other international portfolios in the Nations Funds Family,
there is no need for the Fund to enter into an entirely new agreement;
the Fund may simply be added to an existing agreement by amendment.
Accordingly, the Special Meeting is being called for shareholders to
ratify and approve adding the Fund to the existing investment
sub-advisory agreement.
Although it is proposed that Gartmore receive a fee that is higher than
the fee paid to Kleinwort, NBAI -- not the Fund -- pays the
sub-advisory fee. Therefore, there will be NO
<PAGE>
INCREASE IN THE INVESTMENT ADVISORY FEE CHARGED TO THE FUND AS A
CONSEQUENCE OF APPROVING THE AMENDMENT TO THE INVESTMENT SUB-ADVISORY
AGREEMENT WITH GARTMORE.
o CHANGES TO CERTAIN OF THE FUNDAMENTAL RESTRICTIONS OF THE FUND
In addition, in order to standardize the Fund's restrictions with those
of the other Gartmore sub-advised funds in the Nations Funds Family,
shareholders also will be asked to approve changes to certain of the
fundamental restrictions of the Fund. Neither your Board of Directors,
NBAI nor Gartmore expect that these changes will have a material impact
on the day-to-day management of the Fund. The investment objective of
the Fund would be unaffected by the proposed changes. The Fund's
investment objective will continue to be to seek long-term capital
growth by investing primarily in equity securities of companies
domiciled in countries outside the United States and listed on major
stock exchanges primarily in Europe and the Pacific Basin.
THE BOARD OF DIRECTORS OF NATIONS FUND, INC. UNANIMOUSLY RECOMMENDS
THAT SHAREHOLDERS VOTE FOR THE APPROVAL OF THE AMENDMENT ADDING THE FUND TO THE
INVESTMENT SUB-ADVISORY AGREEMENT WITH GARTMORE AND FOR THE CHANGES TO CERTAIN
OF THE FUNDAMENTAL RESTRICTIONS OF THE FUND.
Attached are the formal Notice of Special Meeting and a Proxy Statement
with a Proxy Card for you to mark, sign, date and return to us. Please return
your Proxy Card in time for us to receive it by October 10, 1997 so that your
vote will be counted even if you do not attend the Special Meeting in person.
YOUR VOTE IS VERY IMPORTANT TO US REGARDLESS OF THE NUMBER OF SHARES
THAT YOU OWN. PLEASE MARK, SIGN, DATE AND RETURN YOUR PROXY CARD TODAY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE OR BY TELEFACSIMILE AT (704) 386-3665.
The proposed amendment to the sub-advisory agreement, changes to
certain of the fundamental policies of the Fund and the reasons for the Board of
Directors' unanimous recommendations are discussed in detail in the enclosed
Proxy Statement, which you should read carefully. If you have any questions
regarding the enclosed materials, please call Nations Fund, Inc., toll-free at
(888) 865-9548. We look forward to receiving your completed Proxy Card very
soon.
Sincerely,
A. Max Walker
President and Chairman of
the Board of Directors
2
<PAGE>
NATIONS FUND, INC.
ONE NATIONSBANK PLAZA
CHARLOTTE, NORTH CAROLINA 28255
TOLL-FREE TELEPHONE: (888) 865-9548
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
NATIONS INTERNATIONAL GROWTH FUND OF
NATIONS FUND, INC.
TO BE HELD ON OCTOBER 10, 1997
A Special Meeting of Shareholders of Nations International Growth Fund
(the "Fund"), a portfolio of Nations Fund, Inc., will be held at the offices of
Nations Fund, Inc., One NationsBank Plaza, 33rd Floor, Charlotte, North Carolina
28255, at 9:00 a.m., Eastern time, on October 10, 1997, for the following
purposes:
1. To approve an amendment adding the Fund to an existing investment
sub-advisory agreement among NationsBanc Advisors, Inc., Nations Fund,
Inc. and Gartmore Global Partners ("Gartmore");
2. To approve changes to certain of the fundamental restrictions of the
Fund; and
3. To consider and act upon any matters incidental to the foregoing
proposals or either of them, and any other matters that may properly
come before the Special Meeting or any adjournment(s) thereof.
The Board of Directors has authorized the Officers of Nations Fund,
Inc. to fix the close of business on August 15, 1997, as the record date for the
determination of shareholders entitled to receive notice of and to vote at the
Special Meeting or any adjournment(s) thereof. The enclosed Proxy Statement
contains further information regarding the Special Meeting and the proposals to
be considered. The enclosed Proxy Card is intended to permit you to vote even if
you do not attend the Special Meeting in person.
<PAGE>
YOUR PROXY IS VERY IMPORTANT TO US. WHETHER OR NOT YOU PLAN TO ATTEND
THE SPECIAL MEETING IN PERSON, PLEASE MARK, SIGN, DATE AND RETURN THE ENCLOSED
PROXY CARD TODAY, EITHER IN THE ENCLOSED POSTAGE-PAID ENVELOPE OR BY
TELEFACSIMILE AT (704) 386-3665. Signed but unmarked Proxy Cards will be counted
in determining whether a quorum is present and will be voted in favor of the
proposal.
By Order of the Board of Directors
Richard H. Blank, Jr.
Secretary
August 31, 1997
-------------------------------------------------------------------------------
YOUR VOTE IS VERY IMPORTANT TO US REGARDLESS
OF THE NUMBER OF SHARES THAT YOU OWN.
PLEASE MARK, SIGN, DATE AND RETURN YOUR
PROXY CARD IMMEDIATELY.
-------------------------------------------------------------------------------
SHARES OF THE FUND ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR ISSUED,
ENDORSED OR GUARANTEED BY, NATIONSBANK, N.A. ("NATIONSBANK") OR ANY OF ITS
AFFILIATES. SUCH SHARES ARE NOT INSURED BY THE U.S. GOVERNMENT, THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT
AGENCY. AN INVESTMENT IN THE FUND INVOLVES CERTAIN RISKS, INCLUDING POSSIBLE
LOSS OF PRINCIPAL.
NATIONSBANC ADVISORS, INC. IS THE INVESTMENT ADVISER TO THE FUND.
NATIONSBANK AND CERTAIN OF ITS AFFILIATES PROVIDE SERVICES TO THE FUND, FOR
WHICH THEY ARE COMPENSATED. STEPHENS INC., WHICH IS NOT AFFILIATED WITH
NATIONSBANK, IS THE SPONSOR AND ADMINISTRATOR AND SERVES AS THE DISTRIBUTOR FOR
THE FUND.
2
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NATIONS FUND, INC.
ONE NATIONSBANK PLAZA
CHARLOTTE, NORTH CAROLINA 28255
TOLL-FREE TELEPHONE: (888) 865-9548
PROXY STATEMENT
AUGUST 31, 1997
This Proxy Statement is being furnished to shareholders of Nations
International Growth Fund (the "Fund") of Nations Fund, Inc. ("Nations Fund") in
connection with the solicitation of proxies by the Board of Directors of Nations
Fund, to be used at a Special Meeting of Shareholders (the "Special Meeting") of
the Fund, to be held on Friday, October 10, 1997, beginning at 9:00 a.m.
(Eastern time) at One NationsBank Plaza, 33rd Floor, Charlotte, North Carolina
28255. Your proxy is being solicited for the purposes set forth in the
accompanying Notice of Special Meeting.
Shareholders of record of the Fund at the close of business on August
15, 1997 (the "Record Date"), are entitled to notice of and to vote at the
Special Meeting. All references to the Special Meeting include any
adjournment(s) thereof. As of the Record Date, there were 35,756,055.852
outstanding shares of the Fund. This proxy statement is first being mailed to
shareholders on or about August 31, 1997.
THE FUND WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS ANNUAL REPORT TO
ANY SHAREHOLDER UPON WRITTEN OR ORAL REQUEST MADE TO THE ADDRESS OR TOLL-FREE
TELEPHONE NUMBER ABOVE.
I. APPROVAL OF AN AMENDMENT ADDING THE FUND TO AN EXISTING INVESTMENT
SUB-ADVISORY AGREEMENT WITH GARTMORE
On May 23, 1997, as part of a reorganization of The Pilot Funds and
Nations Fund, shareholders in the Pilot International Equity Fund became
shareholders in the Fund. Prior to the reorganization, Kleinwort Benson
Investment Management Americas, Inc. ("Kleinwort") served as investment
sub-adviser to the Fund's predecessor, the Pilot International Equity Fund.
After the reorganization, Kleinwort continued to sub-advise the Fund under an
investment sub-advisory agreement among NationsBanc Advisors, Inc. ("NBAI"),
Nations Fund, on behalf of the Fund, and Kleinwort (the "Former Agreement").
Shortly after the reorganization, several key investment management
personnel of Kleinwort decided to separate from Kleinwort. In addition,
Kleinwort and certain of its affiliates underwent an organizational
restructuring. These events left management of Nations Fund and NBAI unsure as
to the quality and nature of the investment sub-advisory services that the Fund
would receive in the future from Kleinwort. Moreover, management of Nations Fund
and NBAI
<PAGE>
grew to believe that it was less efficient for the Nations Funds Family to
maintain relationships with two international sub-advisers, I.E., both Gartmore
Global Partners ("Gartmore"), which sub-advises four other international
portfolios in the Nations Funds Family, and Kleinwort. Accordingly, at a meeting
held in early June 1997, the Board of Directors for Nations Fund voted to
terminate the Former Agreement with Kleinwort effective as of the close of
business on July 11, 1997. Rule 15a-4 under the Investment Company Act of 1940
(the "1940 Act") permits a mutual fund's Board of Directors that terminates an
investment advisory (or sub-advisory) agreement to approve a new investment
advisory agreement for a period of 120 days, subject to certain conditions.
After the end of that 120 day period, the new investment adviser may continue to
serve only if shareholders have approved a new advisory agreement by a 1940 Act
Vote (defined below).
In order both to ensure continuity of investment management to the Fund
following the termination of Kleinwort and to allow shareholders a reasonable
period to consider the approval of a new investment sub-advisory agreement for
the Fund, at the same early June 1997 Board meeting, the Directors of Nations
Fund, including a majority of the Directors who are not interested persons (as
defined in the 1940 Act) of Nations Fund and who are not interested persons of
NBAI or Gartmore, approved an agreement permitting Gartmore to serve as
investment sub-adviser to the Fund for an interim period of not more than 120
days from the date Kleinwort was terminated (the "Interim Agreement"). The Board
concluded that, under the circumstances, terminating Kleinwort and approving the
Interim Agreement was in the best interests of the shareholders of the Fund.
Under the Interim Agreement, which is attached hereto as Exhibit A,
Gartmore serves as investment sub-adviser to the Fund under terms identical in
all material respects to the Former Agreement with Kleinwort. Gartmore is
entitled under the Interim Agreement to receive from NBAI sub-advisory fees at
the annual rate of 0.40% of the Fund's average daily net assets up to and
including $325,000,000 in assets and 0.25% on assets in excess of $325,000,000.
These fees are the same fees that Kleinwort was entitled to under the Former
Agreement.
Because Gartmore may continue to serve as the investment sub-adviser to
the Fund beyond the interim period only with shareholder approval, it is
proposed that shareholders approve a new investment sub-advisory arrangement for
the Fund. The other four international funds of the Nations Funds Family have
already entered into investment sub-advisory agreements with Gartmore.
Accordingly, rather than seeking shareholder approval of a new and separate
sub-advisory agreement with Gartmore, it is proposed that approval be sought for
an amendment that would add the Fund to an existing investment sub-advisory
agreement with Gartmore. Under the amended agreement (the "Amended Agreement")
Gartmore would be entitled to receive from NBAI a sub-advisory fee at the annual
rate of 0.70% of the average daily net assets of the Fund. Because the Amended
Agreement provides that the sub-advisory fee paid to Gartmore would be paid out
of NBAI's advisory fee (as was the case under the Former Agreement and is the
case under the Interim Agreement), THERE WILL NOT BE ANY INCREASE IN THE
AGGREGATE INVESTMENT ADVISORY FEE CHARGED TO THE FUND AS A CONSEQUENCE OF THE
AMENDED AGREEMENT.
2
<PAGE>
At the meeting held in early June 1997, during which the Board approved
both the termination of Kleinwort and the Interim Agreement, the Directors of
Nations Fund also recommended that Fund shareholders approve the Amended
Agreement. The Board based its decision to take these steps, including
recommending the Amended Agreement, on the following material factors: (i) the
separation of several key Kleinwort investment professionals from Kleinwort;
(ii) an ongoing organizational restructuring involving Kleinwort and certain of
its affiliates; (iii) the uncertainty surrounding the quality and nature of the
investment sub-advisory services that the Fund would receive from Kleinwort in
the future; (iv) the enhanced efficiency (for purposes of regulatory compliance
and otherwise) of having all international investment portfolios in the Nations
Funds Family sub-advised by a common sub-adviser; and (v) the familiarity with
Gartmore management, personnel, experience and operations and the expected
minimal disruption in sub-advisory services to the Fund associated with a
transition from Kleinwort to Gartmore. The Directors based their determinations
on, among other things, discussions with management and representatives of NBAI
and Gartmore at the meeting and a review of materials presented by NBAI and
Gartmore in connection with the meeting. These materials included a form of the
Amended Agreement, a detailed report and presentation from Gartmore, and
comparative fee data.
Pursuant to the Amended Agreement, subject to the policies and control
of Nations Fund's Board of Directors and the overall supervision of NBAI,
Gartmore would render research and advisory services to NBAI and the Fund, in
accordance with the investment objective, policies and restrictions of the Fund.
NBAI would retain overall authority over the management of the Fund and the
investment and disposition of the Fund's assets, and NBAI would be able to
reject any investment recommendation or decision for the Fund if it determines
that such recommendation or decision is not consistent with the best interests
of the Fund.
If approved by shareholders at the Meeting, the Amended Agreement would
remain in effect for a one-year period following the date of such approval.
Thereafter, the New Agreement would continue in effect for successive periods
not to exceed one year, provided that such continuance is specifically approved
at least annually by the Board of Directors of Nations Fund, or by a 1940 Act
Vote (defined below), and in either case by a majority of the Directors who are
not parties to the Amended Agreement or interested persons (as defined in the
1940 Act) of any such parties other than as Directors of Nations Fund. The
Amended Agreement may be terminated on 60 days' written notice at any time by
NBAI, without the payment of any penalty, by a 1940 Act Vote (defined below) or
by a vote of a majority of Nations Fund's Board of Directors. The Amended
Agreement would terminate automatically in the event of its assignment. The
Amended Agreement provides that Gartmore shall not be liable for any act or
omission in the course of, or connected with, rendering services thereunder,
except by reason of Gartmore's willful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reckless disregard of its
duties and obligations thereunder.
The Board of Directors believes that the Amended Agreement is in the
best interests of the Fund and its shareholders, and recommends that
shareholders vote to approve the Amended Agreement.
3
<PAGE>
NBAI serves as investment adviser to the Fund. NBAI is a wholly owned
subsidiary of NationsBank, N.A., which in turn is a wholly owned banking
subsidiary of NationsBank Corporation, a bank holding company organized as a
North Carolina corporation. NBAI has its principal offices at One NationsBank
Plaza, Charlotte, North Carolina 28255.
Stephens Inc., with principal offices at 111 Center Street, Suite 300,
Little Rock, Arkansas 72201, serves as the Fund's distributor and administrator.
INFORMATION REGARDING GARTMORE
Gartmore, with principal offices at One NationsBank Plaza, Charlotte,
North Carolina 28255, serves as investment sub-adviser to the Fund pursuant to
the Interim Agreement which was approved by the Board of Directors of Nations
Fund. Gartmore is a joint venture structured as a general partnership between NB
Partner Corp., a wholly owned subsidiary of NationsBank, N.A., and Gartmore U.S.
Limited, an indirect, wholly owned subsidiary of Gartmore Investment Management
plc ("Gartmore plc"), a U.K. company which is the holding company for a leading
U.K.-based international fund management group of companies. National
Westminster Bank plc ("NatWest") and affiliated entities own 100% of the equity
of Gartmore plc. NatWest is headquartered at 41 Lothbury, London EC2P 2BP,
England and Gartmore plc is headquartered at Gartmore House, 16-18 Monument
Street, London EC3R 8AJ, England. Gartmore is managed by a four-person
management committee, with two members appointed by each partner, and day-to-day
affairs are managed by a chief executive officer and a chief investment officer.
The principal executive officers of Gartmore are listed below. The
business address of each such individual is One NationsBank Plaza, Charlotte,
North Carolina 28255.
<TABLE>
<CAPTION>
Position at Gartmore
Name and Address Global Partners Principal Occupation
<S> <C> <C>
Andrew N.R. Fleming Chief Executive Officer; Chief Chief Investment Officer and Chief
Investment Officer Executive Officer, Gartmore Global
Partners; Director and Deputy Chief
Investment Officer, Gartmore
Investment Management plc
John W. Munce Committee Member Executive Vice President, NationsBank
Mark H. Williamson Committee Member Senior Vice President, NationsBank
Paul Myners Committee Member Chief Executive, NatWest Wealth
Management
4
<PAGE>
Position at Gartmore
Name and Address Global Partners Principal Occupation
Andrew J. Brown Committee Member Joint Chief Executive, Gartmore
Investment Management plc
</TABLE>
The aggregate amount paid to Kleinwort by Boatmen's Trust Company (the
Pilot International Equity Fund's investment adviser) for the period September
1, 1996 through May 16, 1997 was $1,544,789. Had the proposed fee rate (I.E.,
0.70% of the Fund's average daily net assets) been in effect during that period
sub-advisory fees in the amount of $3,379,226 would have been paid. Although,
this would represent an increase of 119%, there will be NO INCREASE IN THE
INVESTMENT ADVISORY FEE CHARGED TO THE FUND AS A CONSEQUENCE OF THE AMENDED
AGREEMENT WITH GARTMORE.
There are certain differences in the investment strategy that Kleinwort
employed for the Fund and that Gartmore currently employs for the Fund that
shareholders should consider. Gartmore's investment approach for the Fund
focuses on bottom-up stock selection with the objective of constructing a
diversified portfolio of non-U.S. stocks capable of above-average earnings
growth. Macroeconomic analysis is employed to identify global economic
conditions that are likely to provide attractive investment opportunities. In
addition, sector analysis is employed to identify positive industry trends.
Gartmore's approach is likely to produce a relatively concentrated list of
stocks suitable for inclusion in the portfolio. And whereas Kleinwort chose to
diversify the Fund's portfolio over 200 companies, Gartmore expects that over
time, the portfolio will consist of between 70 and 100 stocks, encompassing both
large and medium-sized companies, typically with market capitalizations of more
than $500 million. Because Gartmore's strategy contemplates that the Fund will
hold securities of fewer issuers, the Fund's holdings will be more concentrated,
although NBAI and Gartmore believe that a portfolio of 70 to 100 stocks is well
diversified. Additionally, as Gartmore implements its strategy of paring down
the number of holdings of the Fund, the Fund may realize certain capital gains
(which are subject to tax) and/or losses.
Gartmore also serves as investment sub-adviser to four other
international portfolios in the Nations Funds Family: Nations International
Equity Fund, Nations Emerging Markets Fund, Nations Pacific Growth Fund and
Nations Global Government Income Fund. For services provided pursuant to
investment sub-advisory agreements, NBAI pays Gartmore sub-advisory fees,
computed daily and paid monthly, at the annual rates of:
3
<PAGE>
Annual Total Net Assets
Fund Name Sub-Advisory Fee as of 3/31/97
Nations International Equity Fund .70% $1,029,510,029
Nations Pacific Growth Fund .70% $ 128,454,273
Nations Emerging Growth Fund .85% $ 79,402,763
Nations Global Government Income Fund .54% $ 43,442,002
For the fiscal year ended March 31, 1997, Gartmore did not waive or
otherwise reduce its compensation under any applicable contract for the above
funds.
No officer or director of Nations Fund is an officer, employee,
director, general partner or shareholder of NBAI, Gartmore or their affiliates.
II. APPROVAL OF CHANGES TO CERTAIN OF THE FUNDAMENTAL RESTRICTIONS OF
THE FUND
All registered investment companies are required to identify certain
investment restrictions and to characterize them as fundamental (I.E., requiring
shareholder vote to change) or non-fundamental. The By-Laws of Nations Fund
similarly require that the fundamental restrictions of the Fund may only be
changed by a 1940 Act Vote. As a general matter, most of the funds in the
Nations Funds Family have substantially similar fundamental and non-fundamental
restrictions. Some of the fundamental and non-fundamental restrictions of the
Fund differ from those of the other Nations Funds because the restrictions of
its predecessor, the Pilot International Equity Fund, were carried over as a
consequence of the reorganization of The Pilot Funds and Nations Fund. Although
these differences are not substantial, shareholders are being asked to approve a
change to the fundamental restrictions of the Fund because, for reasons of
regulatory compliance, it is more efficient for NBAI and Gartmore, as investment
adviser and sub-adviser, respectively, to the Fund, to manage the Fund subject
to the same fundamental and non-fundamental restrictions as the other funds in
the Nations Funds Family. THESE CHANGES WILL NOT AFFECT THE INVESTMENT OBJECTIVE
OF THE FUND.
The proposed changes to the Fund's fundamental investment restrictions
are described below.
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL
INVESTMENT RESTRICTION PROPOSED INVESTMENT RESTRICTION
<S> <C>
1. The Fund may not invest in companies for the purpose This restriction will be re-characterized as a
of exercising control or management. non-fundamental restriction.
2. The Fund may not purchase or sell...commodities or The Fund may not purchase or sell commodity contracts,
commodity contracts except that the Fund may, to the
6
<PAGE>
relating to physical commodities..., extent appropriate under its investment policies,
except that the Fund may invest purchase publicly traded securities of companies
up to 10% of its net assets in gold bullion. engaging in whole or in part in such activities, may
enter into futures contracts and related options, may
engage in transactions on a when-issued or forward
commitment basis, and may enter into forward
currency contracts in accordance with its investment
policies.
3. The Fund may not mortgage, pledge or
hypothecate more than one-third of the Fund's This restriction will be re-characterized as a
assets, except to secure permitted borrowings. non-fundamental restriction.
4. The Fund may not borrow money, except (a) as a The Fund may not borrow money or issue senior
temporary measure, and then only in amounts not exceeding securities as defined in the 1940 Act except that
5% of the value of the Fund's total assets, (b) from (a) the Fund may borrow money from banks for temporary
banks, or (c) in connection with reverse repurchase purposes in amounts up to one-third of the value of the
agreements, provided that immediately after any such Fund's total assets at the time of borrowing, provided
borrowing all borrowings of the fund do not exceed that borrowings in excess of 5% of the value of the
one-third of the Fund's total assets. While the Fund has Fund's total assets will be repaid prior to the
borrowings outstanding in an amount exceeding 5% of its purchase of additional portfolio securities by the
total assets the Fund will not make any purchases of Fund, (b) the Fund may enter into commitments to
portfolio instruments for the Fund. The Fund may not purchase securities in accordance with the Fund's
borrow money from Boatmen's Bancshares, Inc. [now investment program, including delayed delivery and
NationsBank corporation] or any majority-owned subsidiary when-issued securities, which commitments may be
thereof. considered the issuance of senior securities, (c) the
Fund may enter into reverse repurchase agreements or
dollar roll transactions, and (d) the Fund may issue
multiple classes of shares in accordance with SEC
regulations or exemptions under the 1940 Act. The
purchase or sale of futures contracts and related
options shall not be considered to involve the
borrowing of money or issuance of senior securities.
Each Fund will maintain asset coverage of 300% or
maintain a segregated account with its custodian bank
in which it will maintain cash, U.S. Government
Securities or other liquid high grade debt obligations
equal in value to its borrowing.
7
<PAGE>
5. The Fund may not purchase or sell real The Fund may not invest in real estate or real estate
estate (except securities secured by real estate limited partnership interests. (The Fund may, however,
or interests therein, securities issued by real purchase and sell securities secured by real estate or
investment trusts and securities of companies interests therein or issued by issuers which invest in
that deal in real estate or mortgages). real estate or interests therein.) This restriction
does not apply to real estate limited partnerships
listed on a national stock exchange (e.g., the New York
Stock Exchange).
</TABLE>
MISCELLANEOUS
PROCEDURAL MATTERS
Each shareholder of the Fund will be entitled to one vote for each
share and a fractional vote for each fractional share held by such shareholder
with respect to any proposal on which the shareholder is entitled to vote.
Shareholders holding a majority of the outstanding shares of the Fund at the
close of business on the Record Date will constitute a quorum for the approval
of the proposals described in the accompanying Notice of Special Meeting and in
this Proxy Statement (the "Proposals").
As used herein, a "1940 Act Vote" of the shares of the Fund means a
vote of the holders of the lesser of (a) more than fifty percent (50%) of the
outstanding shares of the Fund or (b) sixty-seven percent (67%) or more of the
shares of the Fund present at the meeting if more than fifty percent (50%) of
the outstanding shares of the Fund are represented at the meeting in person or
by proxy. All shares will be voted on a combined, Fund-wide basis, and not by
class. A 1940 Act Vote of the shares of the Fund is required to approve the
Proposals.
Any proxy card which is properly executed and received in time to be
voted at the Special Meeting will be counted in determining whether a quorum is
present and will be voted in accordance with the instructions marked thereon. In
the absence of instructions, any such proxy card will be voted in favor of the
Proposals. Abstentions and "broker non-votes" (I.E., proxies from brokers or
nominees indicating that such persons have not received instructions from the
beneficial owners or other persons entitled to vote shares as to a particular
matter with respect to which the brokers or nominees do not have discretionary
power to vote) will not be counted for or against any proxy to which they
relate, but will be counted for purposes of determining whether a quorum is
present and will be counted as votes present for purposes of determining a
majority of the outstanding shares of the Fund present at the Special Meeting.
For this reason, abstentions and broker non-votes will have the effect of a vote
against the Proposals.
8
<PAGE>
If, by the time scheduled for the Special Meeting, a quorum is not
present, or if a quorum is present but sufficient votes in favor of the
Proposals are not received, the persons named as proxies may move for one or
more adjournments of the Special Meeting to permit further solicitation of
proxies with respect to the Proposals. Any such adjournment(s) will require the
affirmative vote of a majority of the shares present in person or by proxy at
the session of the Special Meeting to be adjourned.
The duly appointed proxies may, in their discretion, vote upon such
other matters as may come before the Special Meeting or any adjournment(s)
thereof, including any proposals to adjourn a meeting at which a quorum is
present to permit the continued solicitation of proxies in favor of the
Proposals. A shareholder of the Fund may revoke his or her proxy at any time
prior to its exercise by delivering written notice of revocation or by executing
and delivering a later-dated proxy to the Secretary of Nations Fund, at the
address set forth on the cover page of this Proxy Statement, or by attending the
Special Meeting in person to vote the shares held by such shareholder.
Signed but unmarked proxy cards will be counted in determining whether
a quorum is present and will be voted in favor of the Proposals.
ADDITIONAL INFORMATION
A shareholder may receive, without charge, a copy of the annual report
and most recent semi-annual report, succeeding the annual report, if any, by
writing: Nations Fund, Inc., c/o Stephens Inc., One NationsBank Plaza, 33rd
Floor, Charlotte, North Carolina 28255, or by calling toll-free (888) 865-9548.
Nations Fund is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "1934 Act") and the 1940 Act, and in accordance
therewith files reports, proxy material and other information with the
Securities and Exchange Commission (the "SEC"). Such reports, proxy materials
and other information may be inspected and copied at the public reference
facilities of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. Copies
of such materials can be obtained from the Public Reference Section of the SEC
at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
SOLICITATION OF PROXIES AND PAYMENT OF EXPENSES
Approximately one half of the cost of soliciting proxies for the
Special Meeting, consisting principally of printing and mailing expenses,
together with the costs of any supplementary solicitation and proxy soliciting
services provided by third parties, will be borne by the Fund. The remaining
half not borne by the Fund will be borne by NBAI and/or Gartmore. Management
estimates that the total cost of soliciting proxies will be $60,000. Proxies
will be solicited in the initial, and any supplemental, solicitation by mail and
may be solicited in person, by telephone, telegraph, telefacsimile, or other
electronic means by officers of Nations Fund, personnel of NationsBank and/or
Stephens, or an agent of Nations Fund for compensation to be paid by the
NationsBank and/or Stephens.
9
<PAGE>
SUBSTANTIAL SHAREHOLDERS
As of the close of business on the record date, there were no persons
known to Nations Fund to be beneficial or record owners of 5% or more of the
outstanding shares of the Fund, except as follows:
<TABLE>
<CAPTION>
CLASS; AMOUNT OF SHARES PERCENTAGE PERCENTAGE
NAME OF ADDRESS OWNED; TYPE OF OWNERSHIP OF CLASS OF FUND
<S> <C> <C> <C>
Boat & Co. Primary A; 17,483,142.696; 50.77% 48.90%
P.O. Box 14737 Record
St. Louis, MO 63178-4737
CNOM & Co. Primary A; 10,797,789.834; 31.35% 30.20%
P.O. Box 500409 Record
St. Louis, MO 63150-0409
RODAC & Co. Primary A; 2,641,209.679; 7.67% 7.39%
P.O. Box 500409 Record
St. Louis, MO 63150-0409
NationsBank of Texas, N.A. Primary A; 2,518,006.095; 7.31% 7.04%
Attn: Adrian Castillo Record
1401 Elm Street 11th Floor
Dallas, TX 75202-2911
Stephens Inc. Primary B; 1; Record and Beneficial 100% Less than 0.01%
Attn: Cindy Cole
111 Center Street
Little Rock, AR 72201
Kleinwort Benson Invest Mgt. Ltd. Investor A; 87,090.707; 6.76% 0.24%
Client Account Record
Att: Andy Poile
P.O. Box 191 20 Fenchurch St.
London England BC3P 3DB
Boatmen's Cust. IRA FBO Investor B; 3,535.469; 11.99% 0.01%
Richard E. Snowbarger Record
P.O. Box 3884
Telluride, CO 81435
Boatmen's Cust. IRA FBO Investor B; 1,877.578; Record 6.37% 0.01%
Edward Goldsich
5115 W. 81st Street
Prairie Village, KS 66208-4920
Donaldson Lufkin Jenrette Investor B; 1.565.037; Record 5.30% 0.01%
Securities Corporation Inc.
P.O. Box 2052
Jersey City, NJ 07303-2052
10
<PAGE>
CLASS; AMOUNT OF SHARES PERCENTAGE PERCENTAGE
NAME OF ADDRESS OWNED; TYPE OF OWNERSHIP OF CLASS OF FUND
Test Account for Mutual Funds Investor C; 1; 50% Less than 0.01%
Muire Turkus and M.J. Meschino Record and Beneficial
5 World Trade Center
Operations Support/6th Floor
New York, NY 10048-0205
Stephens Inc. Primary B; 1; 50% Less than 0.01%
Attn: Cindy Cole Record and Beneficial
111 Center Street
Little Rock, AR 72201
</TABLE>
As of the close of business on the Record Date, the officers and
Directors of Nations Fund as a group beneficially owned less than 1% of the
outstanding shares of the Fund.
AFFILIATED BROKER COMMISSIONS
For the fiscal year ended May 16, 1997, there were no brokerage
commissions paid by the Fund to affiliates of the Fund or affiliates of such
affiliates.
OTHER BUSINESS
The Board of Directors of Nations Fund knows of no other business to be
brought before the Special Meeting. However, if any other matters come before
the Special Meeting, including any proposals to adjourn the meeting to permit
the continued solicitation of proxies in favor of the Proposals, it is their
intention that Proxy Cards which do not contain specific restrictions to the
contrary will be voted on such matters in accordance with the judgment of the
persons named as proxies.
FUTURE SHAREHOLDER PROPOSALS
Pursuant to rules adopted by the SEC under the 1934 Act, investors may
request inclusion in the Board's proxy statement for shareholder meetings
certain proposals for action which they intend to introduce at such meeting. Any
shareholder proposals must be presented a reasonable time before the proxy
materials for the next meeting are sent to shareholders. The submission of a
proposals does not guarantee its inclusion in Nation Fund's proxy statement and
is subject to limitations under the 1934 Act. It is not presently anticipated
that Nations Fund will hold regular meetings of shareholders, and no anticipated
date of the next meeting can be provided.
11
<PAGE>
YOUR VOTE IS VERY IMPORTANT TO US. WHETHER OR NOT YOU PLAN TO ATTEND
THE MEETING IN PERSON, PLEASE MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY
CARD TODAY, EITHER IN THE ENCLOSED POSTAGE-PAID ENVELOPE OR BY TELEFACSIMILE AT
(704) 386-3665. Signed but unmarked Proxy Cards will be counted in determining
whether a quorum is present and will be voted in favor of the proposals.
By Order of the Board of Directors
Richard H. Blank, Jr.
Secretary
August 31, 1997
12
<PAGE>
EXHIBIT A
SUB-ADVISORY AGREEMENT
NATIONS FUND, INC.
THIS AGREEMENT is made this 10th day of April, 1996, by and among
NATIONSBANC ADVISORS, INC., a North Carolina corporation (the "Adviser"),
GARTMORE GLOBAL PARTNERS, a general partnership organized under the laws of the
State of Delaware (the "Sub-Adviser"), and NATIONS FUND, INC. (the "Company"),
on behalf of the portfolio or portfolios of the Company as now or hereafter may
be identified on Schedule I hereto (each a "Fund" and collectively, the
"Funds").
RECITALS
WHEREAS, the Company is a Maryland corporation registered under
the Investment Company Act of 1940, as amended (the "1940 Act") as an open-end,
series management investment company; and
WHEREAS, the Adviser is a national bank that serves as investment
adviser to other registered investment companies and various investment
accounts; and
WHEREAS, the Sub-Adviser is registered under the Investment
Advisers Act of 1940, as amended (the "Advisers Act"), as an investment adviser
and engages in the business of acting as an investment adviser, and is regulated
by the Investment Management Regulatory Organization Limited ("IMRO") of the
United Kingdom in the conduct of its investment business and is a member of
IMRO; and
WHEREAS, the Adviser and the Company have entered into an
Investment Advisory Agreement of even date herewith (the "Investment Advisory
Agreement"), pursuant to which the Adviser shall act as investment adviser with
respect to the Funds; and
WHEREAS, pursuant to such Investment Advisory Agreement, the
Adviser, with the approval of the Company, wishes to retain the Sub-Adviser for
purposes of rendering advisory services to the Adviser and the Company in
connection with the Funds upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt whereof is
hereby acknowledged, the parties hereto agree as follows:
1. APPOINTMENT OF SUB-ADVISER. The Adviser hereby appoints, and
the Company hereby approves, the Sub-Adviser to render investment research and
advisory services to the Adviser and the Company with respect to the Funds,
under the supervision of the Adviser and subject to the policies and control of
the Company's Board of Directors, and the Sub-Adviser hereby accepts such
appointment, all subject to the terms and conditions contained herein.
<PAGE>
2. INVESTMENT SERVICES. The specific duties of the Adviser
delegated to the Sub-Adviser shall be the following:
(a) obtaining and evaluating pertinent information about
significant developments and economic, statistical and financial data,
domestic, foreign or otherwise, whether affecting the economy generally
or the Funds specifically, and whether concerning the individual issuers
whose securities are included in the Funds or the activities in which
such issuers engage, or with respect to securities which the Adviser or
Sub-Adviser considers desirable for inclusion in the Funds;
(b) investing and reinvesting, on an ongoing basis, assets
held in the Funds in strict accordance with the investment policies of
the Funds as set forth in the registration statement of the Company with
respect to the Funds, as the same may be amended from time to time;
(c) in accordance with policies and procedures established
by the Board of Directors of the Company and the Adviser, selecting
brokers and dealers to execute portfolio transactions for the Funds and
selecting the markets on or in which the transactions will be executed;
(d) voting, either in person or by general or limited
proxy, or refraining from voting, any securities held in the Funds for
any purposes; exercising or selling any subscription or conversion
rights; consenting to and joining in or opposing any voting trusts,
reorganizations, consolidations, mergers, foreclosures and liquidations
and in connection therewith, depositing securities, and accepting and
holding other property received therefor, all as may be considered
appropriate by the Sub-Adviser; and
(e) performing other acts necessary or appropriate in
connection with the proper management of the Funds, consistent with its
obligations hereunder, and as may be directed by the Adviser and/or the
Company's Board of Directors.
In carrying out its obligations under clauses (b) to (e),
inclusive, of this Paragraph 2, the Sub-Adviser shall act only as agent of the
Company and/or the Fund and shall not act as principal. The Sub-Adviser shall
not be responsible for the administration of the Fund, for the execution and
settlement of transactions in securities or derivative instruments nor for the
custody of any such securities or instruments or documents of title and the
Sub-Adviser shall not hold any money or other assets of the Fund or the Company.
3. CONTROL BY BOARD OF DIRECTORS. As is the case with respect to
the Adviser under the Investment Advisory Agreement, any investment activities
undertaken by the Sub-Adviser pursuant to this Agreement, as well as any other
activities undertaken by the Sub-Adviser with respect to the Funds, shall at all
times be subject to any directives of the Board of Directors of the Company.
Without limiting the right of the Board of Directors of the Company to issue
directives, the Board of Directors shall take into consideration any views or
opinions that may be expressed by the Adviser of Sub-Adviser in formulating
policies, procedures and directives. The
2
<PAGE>
Sub-Adviser shall not be obligated to conform its activities to any directive of
the Board of Directors of the Company to the extent that compliance with such
directive would be in contravention of any law, rule or regulation applicable to
the Sub-Adviser.
4. COMPLIANCE WITH APPLICABLE REQUIREMENTS. In carrying out its
obligations under this Agreement, the Sub-Adviser shall at all times conform to:
(a) all applicable provisions of the 1940 Act and any rules
and regulations adopted thereunder;
(b) the provisions of the registration statement of the
Company applicable to the Funds, as the same may be amended from time to
time, under the Securities Act of 1933 and the 1940 Act;
(c) the Conduct of Business Rules of IMRO ("IMRO Rules") to
the extent that the IMRO Rules are not inconsistent with any applicable
requirements under the 1940 Act, the Advisers Act or other United States
federal or state law; and
(d) such policies and procedures that may be established by
the Board of Directors of the Company and communicated to the
Sub-Adviser from time to time.
In addition, any code of ethics adopted by the Sub-Adviser
pursuant to Rule 17j-1 under the 1940 Act shall include policies, prohibitions
and procedures which substantially conform to the recommendations regarding
personal investing approved by the Board of Governors of the Investment Company
Institute on June 30, 1994, as such recommendations may amended from time to
time.
5. COMPENSATION. The Adviser shall pay the Sub-Adviser, as
compensation for services rendered hereunder, fees, payable monthly, at the
annual rates indicated on Schedule I hereto, as such Schedule may be
supplemented and amended from time to time. It is understood that the Adviser
shall be responsible for the Sub-Adviser's fee for its services hereunder, and
the Sub-Adviser agrees that it shall have no claim against the Company or the
Fund with respect to compensation under this Agreement. The Sub-Adviser's fees
shall be pro-rated for portions of months in which sub-advisory services are
provided.
The average daily net asset value of the Funds shall be determined
in the manner set forth in the Articles of Incorporation and registration
statement of the Company, as amended from time to time.
6. EXPENSES OF THE FUNDS. All of the ordinary business expenses
incurred by the Sub-Adviser in the operations of the Funds and the offering of
their shares shall be borne by the Funds unless specifically provided otherwise
in this Agreement. These expenses borne by the Funds include but are not limited
to brokerage commissions, taxes, legal, auditing, or governmental fees, the cost
of preparing share certificates, custodian, transfer agent and shareholder
service agent costs, expenses of issue, sale, redemption and repurchase of
shares,
3
<PAGE>
directors and shareholder meetings, the cost of preparing and
distributing reports and notices to shareholders, the fees and other expenses
incurred by the Funds in connection with membership in investment company
organizations and the cost of printing copies of prospectuses and statements of
additional information distributed to the Funds' shareholders.
7. EXPENSE LIMITATION. If, for any fiscal year a Fund, the amount
of the aggregate advisory fee which the Company would otherwise be obligated to
pay with respect to the Fund is reduced pursuant to expense limitation
provisions of the Investment Advisory Agreement, the fee which the Sub-Adviser
would otherwise receive pursuant to this Agreement shall be reduced
proportionately.
8. NON-EXCLUSIVITY. The services of the Sub-Adviser to the Adviser
and the Company with respect to the Fund are not to be deemed to be exclusive,
and the Sub-Adviser shall be free to render investment advisory and
administrative or other services to others (including other investment
companies) and to engage in other activities. It is understood and agreed that
the officers and directors of the Sub-Adviser are not prohibited from engaging
in any other business activity or from rendering services to any other person,
or from serving as partners, officers, directors or trustees of any other firm
or trust, including other investment advisory companies.
9. RECORDS. The Sub-Adviser shall provide to the Adviser, with
respect to the orders the Sub-Adviser places for the purchases and sales of
portfolio securities of the Funds, the documents and records required pursuant
to Rule 31a-1 under the 1940 Act as well as such records as the Funds'
administrator reasonably requests to be maintained, including, but not limited
to, trade tickets and confirmations for portfolio trades. All such records shall
be maintained in a form acceptable to the Funds and in compliance with the
provisions of Rule 31a-1. All such records will be the property of the Funds and
will be available for inspection and use by the Funds. The Sub-Adviser will
promptly notify the Adviser and the Fund's administrator if it experiences any
difficulty in providing the records in an accurate and complete manner.
10. TERM AND APPROVAL. This Agreement shall become effective when
approved, and shall thereafter continue from year to year, provided that the
continuation of the Agreement is specifically approved at least annually:
(a)(i) by the Company's Board of Directors or (ii) by the
vote of "a majority of the outstanding voting securities" of the Fund
(as defined in Section 2(a)(42) of the 1940 Act); and
(b) by the affirmative vote of a majority of the Directors
of the Company who are not parties to this Agreement or "interested
persons" (as defined in the 1940 Act) of a party to this Agreement
(other than as Directors of the Company), by votes cast in person at a
meeting specifically called for such purpose.
11. TERMINATION. This Agreement may be terminated at any time with
respect to a Fund, without the payment of any penalty, by vote of the Company's
Board of Directors or by
4
<PAGE>
vote of a majority of the Fund's outstanding voting securities, or by the
Adviser, or by the Sub-Adviser on sixty (60) days' written notice to the other
parties to this Agreement. Any party entitled to notice may waive the notice
provided for herein. This Agreement shall automatically terminate in the event
of its assignment, the term "assignment" for purposes of this paragraph having
the meaning defined in Section 2(a)(4) of the 1940 Act. This Agreement shall
automatically terminate 120 days after its effectiveness if the Fund's
shareholders have not ratified and approved it within such period. The Agreement
shall automatically terminate upon the effectiveness of a Sub-Advisory Agreement
between the Company on behalf of the Fund and Gartmore Global Partners.
12. LIABILITY OF SUB-ADVISER. In the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of obligations or
duties hereunder on the part of the Sub-Adviser or any of its officers,
directors, employees or agents, the Sub-Adviser shall not be subject to
liability to the Adviser or to the Company for any act or omission in the course
of, or connected with, rendering services hereunder or for any losses that may
be sustained in the purchase, holding or sale of any security. For purposes of
this paragraph and paragraph 13, brokers or dealers selected to execute
portfolio transactions for the Fund in accordance with Paragraph 2(c) hereof
shall not be considered agents of the Sub-Adviser.
13. INDEMNIFICATION. In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of duties hereunder on the part of
the Sub-Adviser, or any officers, directors, employees or agents thereof, the
Company hereby agrees to indemnify and hold harmless the Sub-Adviser against all
claims, actions, suits or proceedings at law or in equity whether brought by a
private party or a governmental department, commission, board, bureau, agency or
instrumentality of any kind, (a) arising from the advertising, solicitation,
sale, purchase or pledge of securities, whether of the Funds or other
securities, undertaken by the Funds or the Company's officers, directors,
employees, agents or affiliates, or (b) resulting from any violations of the
securities laws, rules, regulations, statutes and codes, whether federal or of
any state, by the Funds, or the Company's officers, directors, employees or
affiliates.
14. NOTICES. Any notices under this Agreement shall be in writing
and shall be duly given if delivered, mailed (postage prepaid, effective upon
receipt) or telegraphed, telexed or transmitted by similar telecommunications
device (effective upon completion of transmission, with a confirming copy
delivered or mailed postage prepaid) to such address or number as may be
designated for the receipt of such notice, with a copy to the Company. Until
further notice, it is agreed that the address and telefax number of the Company
shall be 111 Center Street, Little Rock, Arkansas 72201, Fax No. (501) 377-2331;
that of the Sub-Adviser shall be Gartmore House, 16-18 Monument Street, London
EC3R 8AJ, England, Fax No. 71-782-2075; and that of the Adviser shall be c/o
Mutual Fund Group, 33rd Floor, One NationsBank Plaza, Charlotte, North Carolina
28255, Fax No. (704) 388-2187.
15. QUESTIONS OF INTERPRETATION. Any question of interpretation of
any term or provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 1940 Act shall be resolved by reference
to such term or provision of the 1940 Act and to interpretations thereof, if
any, by the United States courts or in the absence of any controlling
5
<PAGE>
decision of any such court, by rules, regulations or orders of the Securities
and Exchange Commission issued pursuant to the 1940 Act. In addition, where the
effect of a requirement of the 1940 Act reflected in any provision of this
Agreement is revised by rule, regulation or order of the Securities and Exchange
Commission, such provision shall be deemed to incorporate the effect of such
rule, regulation or order.
16. IMRO RULES. Addendum A attached hereto sets forth certain
requirements under the IMRO Rules which are applicable to the Sub-Adviser, that
are expressly incorporated herein and made a part hereof, but only to the extent
that such requirements are not inconsistent with any applicable requirements
under the 1940 Act, the Advisers Act or other United States federal or state
law.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed in triplicate by their respective officers on the day and year
first written above.
NATIONS FUND, INC.,
on behalf of the Funds
By: /s/ A. Max Walker
A. Max Walker
President and Chairman of the
Board of Directors
NATIONSBANC ADVISORS, INC.
By: /s/ A. Max Walker
Mark H. Williamson
President and Director
GARTMORE GLOBAL PARTNERS
By: /s/ Charles G. Smith IV
Charles G. Smith IV
President
6
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Fund Rate of Compensation
<S> <C>
1. Nations International Equity Fund 0.70% of average daily net assets
2. Nations International Growth Fund 0.40% of average daily net assets up to including
$325,000,000 in assets and 0.25% on assets in excess of
$325,000,000
</TABLE>
IN WITNESS WHEREOF, the parties hereto have caused this amended Schedule I
to be executed by their officers designated below as of the 11th day of July,
1997.
NATIONS FUND, INC.,
on behalf of the Funds
By: /s/ A. Max Walker
A. Max Walker
President and Chairman of the
Board of Directors
NATIONSBANC ADVISORS, INC.
By: /s/ Mark H. Williamson
Mark H. Williamson
President and Director
GARTMORE GLOBAL PARTNERS
By: /s/ Andrew J. Brown
Andrew J. Brown
Member, Management Committee
Amended: July 11, 1997
7
<PAGE>
ADDENDUM A
1. To the extent that the Sub-Adviser receives any commissions or other forms of
remuneration, directly or indirectly, in connection with Fund transactions, no
portion of the Sub-Adviser's accrued investment advisory fee shall be abated
thereby.
2. Subject to the supervision of the Adviser and the policies and ultimate
control of the Company's Board of Directors, the Sub-Adviser shall advise the
Company and the Adviser on the management of the Funds' investments in
accordance with the terms of this Agreement and in accordance with the
investment parameters (including, inter alia, percentage limitations, quality
standards, investment selection criteria and types of permissible investments
and investment techniques, such as borrowing, options and futures transactions,
portfolio securities lending, etc.) established pursuant to the investment
objectives, policies and restrictions specifically embodied in the Company's
Registration Statement on Form N-1A, and any amendments thereto, under the
Securities Act of 1933 and the 1940 Act (the "Fund's Registration Statement").
3. The Sub-Adviser shall not have or maintain custody of any securities, cash or
other assets of the Funds. Custody of the Funds' assets will be maintained by
the custodian bank pursuant to an agreement approved by the Funds' Board of
Directors. It is expected that such custodian, or any successor thereto, will
not be an "Associate" of the Sub-Adviser as that term is defined under IMRO
Rules.
4. In the event the Funds or the Adviser has a significant complaint regarding
the services provided by the Sub-Adviser under the Sub-Advisory Agreement by
and among the Company, the Adviser and the Sub-Adviser, a Fund officer should
communicate such complaint to the Sub-Adviser, whereupon such complaint will be
recorded on a standard form prepared by the Sub-Adviser for such purposes. The
Sub-Adviser's complaints procedure requires that if a complaint has not been
cleared within twenty-one (21) days, the Sub-Adviser must so advise IMRO and
the Fund also must be advised that it has the right to issue its complaint
directly with a referee appointed by IMRO.
5. The Sub-Adviser will provide to the Funds' Board of Directors written
financial reports and analyses on the Funds' securities transactions and the
operations of comparable investment companies on a quarterly basis or more
frequently as requested by the Board of Directors. Such reports and analyses
shall include information as at the last day of an applicable reporting period.
6. The Funds may from time to time request or instruct the Sub-Adviser, directly
or through the Adviser, to act or not to act regarding certain Fund-related
investment and/or operational matters. Such request or instructions will be
communicated orally or in writing to the Sub-Adviser, directly or through the
Adviser and will be acknowledged in the same manner in which they are
communicated. To the extent that a particular request or instruction is, or may
be, refused (i.e., because it (a) is in contravention of (i) a law or
regulation, (ii) an investment policy of the Fund, or (iii) a provision of this
Agreement or (b) is not operationally feasible), such refusal shall be
communicated by the Sub-Adviser, including through the Adviser, and the Fund
8
<PAGE>
and the Sub-Adviser, upon advice of counsel, shall discuss alternatives and
determine an appropriate course of action which will be reported to the full
Board at the next meeting of the Fund's Board of Directors for its approval.
7. Notwithstanding that all required disclosure concerning the risks associated
with the Funds' permissible investments and investment techniques is included
in the Funds' Registration Statement, which Statement is intended for review by
the investors in the Funds and to be retained by them for future reference,
with respect to the Funds' specified use of options and futures transactions,
the following shall be specifically noted herein:
"Options and futures markets can be highly volatile and transactions of
this type carry a high risk of loss. Moreover, a relatively small
adverse market movement with respect to these types of transactions may
result not only in loss of the original investment but also in
unquantifiable further loss exceeding any margin deposited."
Further, in managing the Funds' assets, the Sub-Adviser shall consider the
risks associated with the Fund's permissible investments and investment
techniques.
8. The Sub-Adviser or its representatives may from time to time recommend to the
Funds or effect on behalf of the Funds with respect to Fund transactions in
securities the subject of a recent new issue, the price of which transactions
may have been influenced by bids made or transactions effected for the purpose
of stabilizing the price of those securities. Such transactions would at all
times be effected in accordance with the provisions of IMRO Rule 14 and, in
particular, with the conditions of the IMRO Rule 14.02, including the
requirement that the Sub-Adviser, with respect to any specific transaction,
communicate to the Fund orally or in writing a statement in a form
substantially similar to that which is set forth in IMRO Rule 14.02(c). In
addition, with respect to these transactions, it is understood when executing
this Agreement and thereafter when approving the continuance of this Agreement
in accordance with its terms, that management of the Fund has carefully read
the following paragraphs in order to enable Fund management to judge whether it
wishes a Fund's assets to be invested at all in such securities or, if so,
whether it wishes to authorize the Sub-Adviser generally to effect transactions
in such securities on behalf of the Fund without further reference to Fund
management or whether Fund management wishes to be consulted before any
particular transaction is effected on behalf of the Fund.
Stabilization is a process whereby the market price of a security is pegged or
fixed during the period in which a new issue of securities is sold to the
public. Stabilization may take place in the new issue or in other securities
related to the new issue in such a way that the price of the other securities
may affect the price of the new issue or vice versa.
The reason stabilization is permitted is that when a new issue is brought to
market the sudden glut will sometimes force the price lower for a period of
time before buyers are found for the securities on offer.
As long as it obeys a strict set of rules, the "stabilizing manager," normally
the issuing house chiefly responsible for bringing a new issue to market, is
entitled to buy securities in the market
9
<PAGE>
that it has previously sold to investors or allotted to institutions who were
included in the new issue but who have decided not to continue participating.
The effect of this may be to keep the price at a higher level than would
otherwise be the case during the period of stabilizing.
The rules referred to above in the immediately preceding paragraph limit the
period in which the stabilizing manager may stabilize, fix the price at which
it may stabilize (in the case of shares and warrants but not bonds), and
require the stabilizing manager to disclose that it may be (but not that it is)
stabilizing. The fact that a new issue or a related security is being
stabilized does not in itself mean that investors are not interested in the
issue, but neither should the existence of transactions in an issue where the
stabilizing may take place be relied upon as an indication that investors are
interested in the new issue or interested in purchasing at the price at which
transactions are taking place.
9. A report containing the Funds' financial statements (including the contents
and valuation of the Funds) shall be submitted to shareholders and to the
Securities and Exchange Commission at least semi-annually. Such reports shall
include information as at the last day of any semi-annual period for which such
reports relate. To the extent that any performance information is included in
such report, it shall conform to the standards set forth in the Funds'
Registration Statement.
10. Except as permitted by or pursuant to Section 17 of the 1940 Act and the
Rules promulgated thereunder, the Sub-Adviser, or an "affiliate" thereof (as
that term is defined in the 1940 Act), may not effect transactions: (i) with or
for the Funds in which the Sub-Adviser or such affiliate has directly or
indirectly a material interest or a relationship of any kind with another party
which may involve a conflict with the Sub-Adviser's responsibilities to the
Funds as a sub-investment adviser; or (ii) with or through the agency or
another person with whom the Sub-Adviser or such affiliate maintains an
arrangement as described in Rule 6.01 of Chapter IV of the IMRO Rules.
11. Upon termination of the Sub-Advisory Agreement by and among the Company, the
Adviser and the Sub-Adviser, unless otherwise directed by the Fund's Board of
Directors, all securities positions and other portfolio transactions then in
progress shall be transferred to the successor investment adviser selected by
the Board of Directors.
12. The Sub-Adviser shall be entitled at its discretion to disclose any
information known to it relating to the Fund's business or affairs to the
Securities and Investment Board or to IMRO on the terms that the information so
disclosed shall not without its consent be further disclosed otherwise than is
permitted in respect of Restricted Information under the provisions of Part
VIII of the Financial Services Act of 1986.
10
<PAGE>
********************************************************************************
APPENDIX
********************************************************************************
PLEASE FOLD AND DETACH CARD AT PERFORATION BEFORE MAILING
NATIONS INTERNATIONAL GROWTH FUND
SPECIAL MEETING OF SHAREHOLDERS-OCTOBER 10, 1997
The undersigned hereby appoints Richard H. Blank, Jr., Louise P.
Newcomb and James E. Banks, Jr. (the "Proxies"), and each of them, attorneys and
proxies of the undersigned, each with power of substitution and resubstitution,
to attend, vote and act for the undersigned at the Special Meeting of
Shareholders of Nations International Growth Fund (the "Fund") of Nations Fund,
Inc. ("Nations Fund") to be held at One NationsBank Plaza, 33rd Floor,
Charlotte, North Carolina 28255, at 9:00 a.m. (Eastern time) on Friday, October
10, 1997, and at any adjournment(s) thereof. The Proxies shall cast votes
according to the number of shares of the Fund which the undersigned may be
entitled to vote with respect to the proposal set forth on the reverse side, in
accordance with the specification indicated, if any, and shall have all the
powers which the undersigned would possess if personally present. The
undersigned hereby revokes any prior proxy to vote at such meeting, and hereby
ratifies and confirms all that said Proxies, or any of them, may lawfully do by
virtue hereof or thereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS OF THE FUND AND THE PROXY STATEMENT, DATED AUGUST 31, 1997.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS ON BEHALF OF THE FUND AND
NATIONS FUND. PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY,
EITHER IN THE ENCLOSED POSTAGE-PAID ENVELOPE OR BY TELEFACSIMILE (FRONT AND
BACK) AT (704) 386-3665.
---------------------------------
---------------------------------
Please sign above
exactly as your name(s)
appear(s) hereon.
Corporate proxies
should be signed in
full corporate name by
an authorized officer.
Each joint owner should
sign personally.
Fiduciaries should give
full titles as such.
<PAGE>
THIS PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSALS. IN THE ABSENCE OF ANY SPECIFICATION, THIS
PROXY WILL BE VOTED IN FAVOR OF THE PROPOSALS. PROXIES NOT RETURNED WILL NOT BE
VOTED.
1. To approve an amendment adding the Fund to an existing investment
sub-advisory agreement with Gartmore Global Partners.
FOR AGAINST ABSTAIN
|_| |_| |_|
2. To approve changes to certain of the fundamental investment restrictions
of the Fund.
FOR AGAINST ABSTAIN
|_| |_| |_|
In their discretion, the Proxies, and each of them, are authorized to vote
upon any other business that may properly come before the meeting, or any
adjournment(s) thereof, including any adjournment(s) necessary to obtain
requisite quorums and/or approvals.
____________________________, 1997
(Please Date)
<PAGE>
